Printer Friendly

COMMERCIAL HEALTH INSURANCE GROUP WARNS AGAINST EMPIRE RATE HIKES AND INEFFICIENCIES

 COMMERCIAL HEALTH INSURANCE GROUP WARNS AGAINST EMPIRE RATE
 HIKES AND INEFFICIENCIES
 NEW YORK, Feb. 26 /PRNewswire/ -- The nation's largest association of commercial health insurers today warned state officials that Empire Blue Cross/Blue Shield wants large rate increases to help pay for mismanagement and to subsidize a political drive to dismantle competition in the state's health insurance market.
 Testifying at the New York State Insurance Department's hearing on Empire's requested rate increases of up to 42 percent, the Health Insurance Association of America (HIAA) said that before a rate increase is granted, an independent audit of Empire's finances and business practices should be conducted to determine the cause of financial troubles at the state's largest insurer. The association noted that government officials in New York state and City, as well as consumer organizations, have also raised questions about Empire's management practices and likewise called for an audit.
 HIAA said the rising costs of health care mean that Empire "needs a rate increase." But, according to Chris Petersen, senior counsel of HIAA, the commercial health insurance industry is concerned that "such steep increases might be used to perpetuate what appears to be mismanagement at Empire."
 In addition, Petersen voiced concern that the especially large hikes sought by Empire in its small-group business would "help subsidize its losses in other lines of business."
 As evidence of Empire's management failures, Petersen cited figures obtained from the Blue's own public documents. According to Petersen, from 1987 to 1990, Empire lost $95 million on its HMO, even though it represents only 1 percent of its business. Empire also lost a projected $268 million on its national accounts business, even though it is not community-rated, not open-enrolled and receives the benefit of a 13-percent advantage in the rates it pays hospitals. Yet "even with this advantage," Petersen said, "Empire continued to lose on these accounts. We do not believe a rate increase on small employers should subsidize the mismanagement that leads to these losses," Petersen stated.
 "Another example of mismanagement at Empire is its handling of claims as a financial intermediary for Medicare," Petersen observed. "When we compared Empire's claims records with that of a commercial carrier, it appeared that Empire administrative costs to manage these claims were 50-percent higher," he noted.
 Petersen dismissed claims by Empire that its financial woes are due to what Empire called the "predatory practices of the commercial insurance industry" and branded the Blue's comments as an attempt "to drive the commercial industry from the marketplace so Empire will not have to compete."
 Petersen said that the commercial industry has proposed reforms that would require all insurers to accept entire groups. According to Petersen, HIAA member companies would also be willing to adopt a system of open enrollment, provided all insurers are allowed to compete equally and a system is established to spread losses fairly throughout the entire health insurance industry.
 Petersen stated that Empire's response to these reforms has been "a rather surprising 'no'," leading him to conclude that "Empire's true agenda" is to dismantle competition, not improve the state's health insurance system.
 According to Petersen, Empire would rather see a system of community rating instituted throughout the state, a move the commercial industry opposes.
 "We believe that community rating is fundamentally unfair and will result in prohibitive rate increases that require younger, less-affluent workers to subsidize the cost of health insurance for older, wealthier employees," he said. For proof, Petersen pointed to figures developed by the state of Maine which concluded that community rating would result in rate increases for at least 60 percent of the small employers in Maine. In addition, HIAA's own numbers show that in New York state some small employers would receive substantial rate increases.
 Petersen also noted that "even the national Blue Cross/Blue Shield organization has rejected community rating" as a viable health insurance solution.
 HIAA also attacked Empire's request to increase its hospital payment advantage from 13 percent to 30 percent, a move, Petersen said, that would make it difficult to establish the "level playing field" Empire says it wants. "Empire's idea of a level playing field," Petersen stated, "is for the commercial industry to open-enroll like Empire, to community-rate like Empire, but Empire would receive a 30-percent hospital-rate advantage. If you were to put snow on that level playing field you could ski down it," he said.
 Petersen reaffirmed that the commercial health insurance industry believes "competition is good. It keeps the cost of health insurance down. Without competition," Petersen concluded, "rate increases, such as the ones contained in today's application, will be seen on a regular basis."
 HIAA is a trade association of the nation's leading commercial insurance carriers that provide health insurance for approximately 95 million Americans.
 -0- 2/26/92
 /CONTACT: Chris Petersen, 202-223-7817, Emily Crandall, 212-598-8388, Kathleen Murphy, 203-273-3847, or Peter McCue, 212-265-9150, all for Health Insurance Association of America/ CO: Health Insurance Association of America; Empire Blue Cross/Blue
 Shield ST: New York IN: INS HEA SU:


CK-KW -- NY056 -- 2870 02/26/92 14:15 EST
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Feb 26, 1992
Words:840
Previous Article:CONGRESS TO HOLD HEARING ON PEACE TAX FUND BILL; SUPPORTERS URGED TO ACT NOW
Next Article:DIME TO OUTSOURCE ITEM PROCESSING TO NATIONAR
Topics:


Related Articles
INSURERS ISSUE STATEMENT ON GOVERNOR'S 'SICK TAX'
THE COUNCIL FOR AFFORDABLE HEALTH INSURANCE CALLS FOR NEW YORK INSURANCE REFORM
SURVEY: INSURANCE INSIDERS SPLIT ON HEALTH CARE REFORM DEBATE BUT UNITED ON OTHER HEALTH INSURANCE ISSUES
Great American Insurance Names Robert A. Nelson President of American Empire Surplus Lines Insurance Company.
Best's Rating Changes. (Ratings).
Blues review: Blue Cross & Blue Shield plans find conversion to for-profit status fraught with red tape. (Life/Health).
Mark Wagar Named President of Empire Blue Cross Blue Shield in New York.
Empire Blue Cross Blue Shield Proposes 60-Day Extension to Current Stellaris Hospital Network Contract.

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters